Correction

This posting has been amended from its original, which mistakenly referred to David Peffer as former staff attorney for UCAN. He is still employed at the organization. Also, the dissolution petition was filed in state court, not federal.

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UCAN highlights

2000-01: Helped pass legislation in Sacramento that rolled back power rates for SDG&E customers after the state deregulated power companies.

2004: State regulators fined Cingular Wireless a then-record $12 million after UCAN helped expose the company practice of signing up customers for services it could not provide.

2006: UCAN lawsuit against City of San Diego over water rates resulted in a settlement that rebated millions of dollars to customers.

2012: Successfully argued before the California Public Utilities Commission against SDG&E’s plan to charge solar-power users substantially higher rates for using the grid.

SOURCE: U-T Archives

The advocacy group that has taken on San Diego utilities for decades has filed for dissolution in court, amid allegations by its own attorney involving secret bank accounts, illegal payments, an impostor lawyer and an author taking on Communist China.

The allegations have become the subject of a federal subpoena of the Utility Consumers’ Action Network.

The group’s staff attorney wrote to board members last year that founder and Executive Director Michael Shames was maintaining suspicious bank accounts and practicing law without a license.

Shames said the allegations were independently investigated and found to be meritless.

“There was no wrongdoing and nothing even close to it,” Shames said.

According to the lawyer’s allegations, Shames maintained at least four bank accounts with the same typo in them - as the Utility Comsumers Action Network, at the same address as UCAN.

The memos also say Shames practiced law without a license and collected $116,678 in wrongful bonuses during a single year under an improper compensation plan that has been in place for at least a decade.

The attorney, whose concerns were not addressed to his satisfaction, enlisted former City Attorney Michael Aguirre.

The group last week filed for dissolution, a proceeding akin to bankruptcy reorganization for a nonprofit.

The dissolution request apparently came in response to a federal grand jury subpoena that was issued Feb. 16 to UCAN Chairman Kendall Squires.

The subpoena, which was reviewed by The Watchdog, demands that Squires appear in U.S. District Court next Thursday, and bring many of the group’s documents with him.

The demand covers UCAN and its sister organization, the Privacy Rights Clearinghouse.

Squires did not return calls seeking comment. Shames said the agency is cooperating fully and the dissolution does not automatically spell the end for his advocacy group.

“There’s a possibility it may be the end of UCAN with the name UCAN,” he said. “It’s not the end of the work I do, and it’s not even clear this process will result in the end of UCAN.”

Shames conceded he was an inactive State Bar member between 1988 and 2011, but said work he performed on behalf of UCAN did not require him to maintain an active law license. He was reinstated to the bar last year.

The FBI request appears to center on many of the allegations lodged by David Peffer, the UCAN staff counsel who authored two highly critical memos addressed to the board of directors.

According to the subpoena, federal agents want records related to UCAN’s dealings with UC Irvine economics professor Peter Navarro; a company Navarro co-founded called Death By China Productions; Navarro’s wife, Leslie W. Lebon; Nucor Inc., a North Carolina steelmaker, and two company executives; and a firm called Red Rock Partners.

Navarro is a former San Diego mayoral and congressional candidate who now teaches economics. He co-wrote “Death By China,” which warns that the Chinese Communist Party poses a looming threat to global peace.

The federal subpoena also requests “all payments to Michael Shames, including salary and bonuses and travel/expense reimbursement,” and “all financial reviews or audits performed on UCAN or PRCH books; and identification of all financial institution accounts used by or held for the benefit of UCAN or PRCH.”

The Peffer memos were submitted to Squires and other UCAN board members in March and April of last year.

They accuse Shames of a series of ethical breaches, including accepting 10 percent bonuses from the fees he won in proceedings before the state Public Utilities Commission.

“This bonus scheme violates (IRS laws) which provides that no part of a tax-exempt organization’s net earnings may inure to the benefit of any private shareholder or individual,” the memo states.

In addition to allegations about suspicious bank accounts and lapsed law license, Peffer also said Shames failed to conduct a state-required audit of the organization.

“I urge you to seriously consider the information and legal advice provided in this letter and take all the steps necessary to remedy the unlawful activity described herein,” Peffer wrote.

“It’s not normal to have the person who’s under inquiry to announce the results of the investigation,” Aguirre said. “Many of the things (Peffer) said were proved to be true.”

Aguirre said he spent months working privately with Squires to resolve the issues raised by his client, but was surprised when he learned UCAN was seeking dissolution.

“We still can’t figure out what possible advantage it is to dissolve the organization,” Aguirre said.

The dissolution filing asks San Diego County Superior Court to name a receiver, who under a judge’s direction would run the organization while it is in the process of being closed.

The filing says UCAN faces “an imminent threat to its ability to carry on and continue with its charitable mission” due to a shortage of cash, uncertain future income, ongoing contractual obligations and various legal threats.

UCAN has been one of the best-known consumer groups in San Diego since it was set up in 1983. Shames has become perhaps the pre-eminent critic of SDG&E’s applications to raise rates and deflect costs from the 2007 wildfires from shareholders to ratepayers.

A statement from the utility on Wednesday noted UCAN’s contribution to the regulatory process.

“While we are not aware of the details involving UCAN’s announcement and the allegations made, we will continue to collaborate with participants in the state’s regulatory process, including UCAN, as we do with the numerous other diverse stakeholders and organizations involved in energy-related matters,” the company said.